Court File and Parties

COURT FILE NO.: CV-15-527301 MOTION HEARD: 2018 08 03

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: John Maxwell and Jonathan Warren v. 8580162 Canada Corp. c.o.b. as Fresh Home Innovations, 8580197 Canada Corp. c.o.b. as Regal Design + Build, Mahdi Ramezanostovan and Ramin Afnani

BEFORE: MASTER R.A. MUIR

COUNSEL: K. Kwinter for the plaintiffs D. Green for the defendants

REASONS FOR DECISION

[1] The plaintiffs bring this motion pursuant to Rule 39.02 of the Rules of Civil Procedure, RRO 1990, Reg. 194 (the “Rules”). The plaintiffs seek leave of the court to file an affidavit and expert opinion evidence from a handwriting expert and forensic document examiner after having conducted cross-examinations. The cross-examinations took place in connection with a motion to set aside a default judgment. The motion to set aside is presently scheduled to be heard by a judge on September 12, 2018. The defendants are opposed.

[2] This action involves a claim for damages arising from a home renovation contract. After a series of defaults on the part of the defendants, the plaintiffs obtained a without notice order striking the defendants’ statement of defence. The plaintiffs then obtained default judgment for $74,192.00 plus costs and interest after an undefended trial before Cavanagh J.

[3] One of the issues, among several, on the motion to set aside the default judgment is whether the defendants received a copy of Master Sugunasiri’s last chance order of March 20, 2017. Her order required the defendants to take various steps to remedy their default. If the defendants did not remedy the default, the plaintiffs were then free to bring a without notice motion to strike the statement of defence.

[4] The defendants’ former lawyer (not Mr. Green or counsel from Linden & Associates) was apparently suspended by the Law Society around the time of the last chance order. The defendants claim that they never received a copy of or knew about the last chance order.

[5] The plaintiffs’ have produced Canada Post tracking reports purportedly showing that some of the letters enclosing the last chance order were signed for by the defendant Ramin Afnani. On June 12, 2018, Mr. Afnani delivered an affidavit stating for the first time that the signatures on the tracking reports were not his. The plaintiffs then served a responding affidavit on June 13, 2018 responding to this evidence. The parties then proceeded to hold cross-examinations on June 14, 2018 at which time Mr. Afnani affirmed his evidence that the signatures were not his.

[6] The plaintiffs then retained a handwriting expert. Due to her schedule she will not be able to produce a report until September 2018.

[7] Rule 39.02 provides as follows:

39.02 (1) A party to a motion or application who has served every affidavit on which the party intends to rely and has completed all examinations under rule 39.03 may cross-examine the deponent of any affidavit served by a party who is adverse in interest on the motion or application.

(2) A party who has cross-examined on an affidavit delivered by an adverse party shall not subsequently deliver an affidavit for use at the hearing or conduct an examination under rule 39.03 without leave or consent, and the court shall grant leave, on such terms as are just, where it is satisfied that the party ought to be permitted to respond to any matter raised on the cross-examination with evidence in the form of an affidavit or a transcript of an examination conducted under rule 39.03.

[8] The applicable law is summarized in my decision in Mars Canada Inc. v. Bemco Cash & Carry Inc., 2015 ONSC 8078 (Master). I stated the following beginning at paragraph 8:

8. The parties are mostly in agreement with respect to the test to be applied by the court in determining whether to grant leave under Rule 39.02. The requirements are set out in First Capital Realty Inc. v. Centrecorp Management Services Ltd., 2009 ONSC 5900 (Div Ct) at paragraphs 13 and 14 where the court states as follows:

13 The case law under rule 39.02(2) confirms the criteria to consider in determining whether a party should be granted leave to respond to a matter raised on cross-examination:

1. Is the evidence relevant?
2. Does the evidence respond to a matter raised on the cross-examination, not necessarily raised for the first time?
3. Would granting leave to file the evidence result in non-compensable prejudice that could not be addressed by imposing costs, terms, or an adjournment?
4. Did the moving party provide a reasonable or adequate explanation for why the evidence was not included at the outset?

See: Brock Home Improvement Products Inc. v. Corcoran (2002), 58 O.R. (3d) 722 (S.C.) at paras. 8-9 and Nolan v. Canada (Attorney General) (1997), 38 O.R. (3d) 722 at 727-8 (Gen. Div.).

14 A flexible, contextual approach is to be taken in assessing the criteria relevant to rule 39.02(2), having regard to the overriding principle outlined in Rule 1.04 of the Rules of Civil Procedure that the rules are to be interpreted liberally to ensure a just, timely resolution of the dispute. An overly rigid interpretation can lead to unfairness by punishing a litigant for an oversight of counsel. See: Arfanis v. University of Ottawa (2004), 7 C.P.C. (6th) 371 (Ont. S.C.) at paras. 8 and 15; BFC Construction Group Inc. v. Ontario Realty Corp. (2001), 17 C.P.C. (5th) 288 (S.C.) at para. 24; Nolan v. Canada (Attorney General).

9. The plaintiff takes some issue with this last point. It relies on a statement made by this court in Skrobacky v. Frymer, 2011 ONSC 3295 where Justice Corrick stated at paragraph 27 that leave under Rule 39.02 should be “granted sparingly” and the moving party has a “very high threshold to meet”.

10. In my view, the approach articulated in First Capital Realty Inc. is to be preferred. First, the decision in First Capital Realty Inc. is a decision of a panel of the Divisional Court and as such takes precedence over a decision of a single judge of the Superior Court. Second, I would note that the decision relied upon by Justice Corrick in support of the more rigid approach is one that pre-dates First Capital Realty Inc. In my respectful view, the court should avoid a rigid interpretation of Rule 39.02. The flexible, contextual approach is to be preferred.

[9] These are the factors and principles I have applied and considered in determining the issues on this motion. In my view, it is just in the circumstances of this action that leave not be granted to deliver additional evidence.

[10] I accept that the evidence of a handwriting expert is relevant to an issue on the pending motion and that it would be responsive to a matter raised on cross-examination. The defendants must have raised the issue of the authenticity of the signatures in their responding evidence for a reason, namely that they were unaware of the last chance order. However, I agree with the defendants that the issue of relevance must be viewed with some regard for the added value of such additional evidence. The motion judge will be required to consider all relevant factors and make the order that is just when he or she is determining the motion to set aside the default judgment. That is not to say the knowledge of the defendants is unimportant for the motion to set aside the judgment but rather the issue must be viewed in context. It is just one factor of several for the judge to consider on the motion to set aside the judgment. The plaintiffs have had an opportunity to respond to the issue with affidavit evidence and they have cross-examined Mr. Afnani on the issue.

[11] I accept that the plaintiffs could not have retained an expert and delivered a report within two days. However, the plaintiffs did have the option of requesting an adjournment of the cross-examinations or at least putting the defendants on notice that if they insisted on proceeding, the plaintiffs would be seeking leave to deliver the expert evidence. This would have at least allowed the defendants an opportunity to consider their options. Instead, the plaintiffs chose to proceed to cross-examine Mr. Afnani without objection and without raising the possibility they may deliver more evidence depending on what evidence Mr. Afnani gave on cross-examination.

[12] I also accept that the defendants may be prejudiced by the delivery of the additional evidence. They have a judgment against them. A garnishment is outstanding that has not been fully satisfied. Writs of seizure and sale are in place. Such circumstances would be detrimental to any operating business and may lead to lost business opportunities and other prejudice. It is not my role on this motion to assess the merits of the motion to set aside the judgment or decide who may be at fault. I do not know whether the defendants’ motion has any merit but I do agree that it is important for such a motion to be heard expeditiously. The delivery of more evidence will require a further adjournment.

[13] One final point is important. The Divisional Court in First Capital Realty Inc. made it clear that a flexible approach is desirable and stressed the importance of Rule 1.04. The rules must be interpreted in a manner that achieves the just, most expeditious and least expensive determination of civil proceedings. I note that this is a simplified procedure case. Proportionality is an important consideration. If it were not for the fact that this is a post-judgment motion, cross-examinations would not be permitted. In my view, proportionality considerations militate against granting leave to deliver the additional evidence. It would require the defendants to retain an expert and deliver a report. Cross-examinations of the experts would no doubt take place. The motion to set aside the default judgment would be postponed again. All in order to adduce additional evidence on just one discreet issue of the several the motion judge must consider and which issue has already been the subject of affidavit evidence and cross-examination. At some point the exchange of evidence must stop and the matter be determined its merits. In my view, an order granting leave to deliver further evidence, in the circumstances of this action, would not be consistent with Rule 1.04 and the principle of proportionality.

[14] For these reasons, the plaintiffs’ motion is dismissed.

[15] The defendants have been successful and are entitled to costs. The partial indemnity costs requested of $2,000.00 are reasonable for a motion of this nature. However, the defendants are presently indebted to the plaintiffs in accordance with a judgment of this court. It is therefore fair and reasonable for the plaintiffs to pay the defendants’ costs of this motion fixed in the amount of $2,000.00 inclusive of HST and disbursements. These costs shall be paid 30 days after the determination of the motion to set aside the default judgment.

Master R.A. Muir DATE: 2018 08 03